Today's call will be hosted by Willie Chiang, Chief Executive Officer; and Al Swanson, Executive Vice President and Chief Financial Officer. Additionally, Harry Pefanis, President and Chief Commercial Officer; Jeremy Goebel, Executive Vice President of Commercial; and Chris Chandler, Executive Vice President and Chief Operating Officer, along with other members of our senior management team are available for the Q&A portion of today's call.

Thanks, Roy. Good afternoon, everyone, and thank you for joining our call. Let me begin by hitting the high points of the information we released today. We're pleased to report second quarter earnings results that exceeded our expectations. As outlined on Slide 3, these results reflect strong performance in our margin-based Supply and Logistics segment and fee-based earnings that were in line with expectations. As Al will discuss more in detail, we have increased our full year adjusted EBITDA guidance by $125 million to plus or minus $2.975 billion, driven primarily by our S&L segment.

We continue to execute on a number of initiatives to position us for the future and to create long-term value for our investors. We provided a comprehensive review of these opportunities at our Investor Day, and highlighted our strategy of optimizing our systems and driving improved returns by advancing capital-efficient projects that leverage existing assets and align us with industry partners. We also continue to focus on managing our financial position to further lower leverage and prudently return cash to equity holders over time.

Our progress on our commercial initiatives are reflected on Slides 4 and 5. Let me highlight a few. Regarding our Permian takeaway projects, we have continued to enhance the Wink to Webster project, further aligning with industry partners to optimize the project. In that regard, MPLX, Delek U.S. and Rattler Midstream have joined as partners in the Wink to Webster joint venture, and we expect an additional undisclosed third party to announce their ownership in the project in the near future.

As a result of these transactions, Wink to Webster is highly contracted under long-term volume commitments. Additionally, Plains' equity interest in the Wink to Webster joint venture has decreased from 20% to 16%. We are targeting Wink to Webster capacity to be in service beginning in early 2021.

In the Rockies and Mid-Continent, we've progressed a number of projects that are great examples of capital efficiency, utilizing our existing assets and commercial flexibility to drive returns above our targeted threshold with further upside. On the Diamond/Capline JV, we have sanctioned an expansion and extension, which will connect the Diamond pipeline to the Capline system. These projects are expected to be placed into service in late 2020 for light crude grades and early 2022 for heavy crude grades. The combined Diamond and Capline project scope is underpinned by a sufficient long -- a sufficient level of long-term commitments to achieve our targeted investment return thresholds, and we are working to further enhance returns by bringing additional committed volumes to the system.

The Saddlehorn JV partners recently announced a capacity expansion of up to 100,000 barrels a day, plus a new Ft. Laramie origin on the Saddlehorn pipeline, which is underpinned by long-term volume commitments. This project is primarily increasing pumping capacity and enhancing commercial alignment to provide additional flexibility to our shipper customers. An initial expansion of 60,000 barrels per day is underway and is expected to be placed into service in late 2020, with the potential to increase to 100,000 barrels a day.

In May, we announced an expansion and new joint venture on our Red River pipeline system, through which Delek increased their long-term minimum volume commitment from 35,000 to 100,000 barrels a day and acquired a 33% equity interest in the project for $128 million. This transaction expands our long-term alignment with a strategic partner and shipper. It supports and more than funds the 85,000 barrel a day capacity expansion. It increases Plains' net committed annual cash flow and it provides an additional source of funding for our capital program or debt reduction. We expect to announce an open season for additional volume commitments on the system in the very near future.

On Red Oak, we're proceeding with preconstruction activities on this 50-50 joint venture with Phillips 66 that was officially sanctioned in June. The system will enable volumes from Cushing, Oklahoma and the Permian Basin to access multiple Gulf Coast destinations, including Corpus Christi, Ingleside, Houston and Beaumont, Texas. We expect the project, which is underpinned by long-term shipper agreements, to begin initial service as early as the first quarter of 2021. We, along with our partner, will evaluate the outcome of the current supplemental open season in progress.

We also continue to advance additional commercial opportunities, including a potential expansion of our Rangeland and Western Corridor systems to support Canadian production growth and further enable movements from Edmonton to U.S. Gulf Coast markets. These expansions are subject to the outcome of the Western Corridor open season that's currently underway.

Each of these projects demonstrate opportunities that are enabled by our existing asset base, our operational capabilities and commercial presence, which allows us to build and position ourselves for the future with accretive growth. These projects will be completed over the next 2 or 3 years, and we expect to be able to self-fund the equity portion of our investments through this time period. As a result of these projects, and as Al will discuss in greater detail, we've increased our 2019 capital program by $150 million, which is expected to be more than offset by proceeds from JV asset sales completed to date and our strong S&L performance generated in the first half of the year.

Before I hand the call over to Al, let me share a quick update on Cactus II. I'm pleased to report that the pipeline is mechanically complete from Wink to Ingleside and that we're currently performing commissioning and line fill activities. As of today, the line is approximately 50% filled with crude, and we anticipate entering initial commercial service sometime next week. We expect to have direct Cactus II connectivity to Corpus in service by the end of the first quarter of 2020.

At this point, I'd like to publicly acknowledge the hard work and dedication of our team to bring our second Permian takeaway project into service within the last 12 months.

Thanks, Willie. During my portion of the call, I'll share a brief recap of our second quarter results, provide updates to our 2019 guidance and growth capital program and review our current capitalization, liquidity and leverage metrics. We reported second quarter adjusted EBITDA of $784 million, which represents a year-over-year increase of 55%, driven by strong performance in our S&L segment. As summarized on Slide 6, our second quarter fee-based results of $582 million were in line with expectations, representing a year-over-year increase of 10% and were roughly flat to the first quarter 2019.

Looking forward to the balance of the year, as illustrated on Slide 7, as Willie noted, we have increased our 2019 adjusted EBITDA guidance by $125 million to plus or minus $2.975 billion. This increase was driven by our S&L performance in the second quarter, primarily attributable to favorable crude oil differentials in the Permian Basin and Canada and improved NGL margins. Additionally, we have lowered our 2019 Transportation segment guidance by approximately $25 million or 1%, calibrating for our current outlook on producer activity levels through the balance of the year. Our 2019 DCF guidance was increased by $65 million reflecting the increased adjusted EBITDA guidance, partially offset by $40 million of higher income tax expense in Canada and a $20 million increase in maintenance capital as we expect to complete more work in 2019 than originally anticipated.

As illustrated on Slide 7, given the newly sanctioned projects Willie discussed, we have increased our 2019 capital program by $150 million net of lower costs on Wink to Webster resulting from our reduced equity interest in the project. We remain focused on capital discipline and prudent financial management. In that regard, the increase in our capital program was more than offset by the $128 million of cash received from the formation of the Red River JV and the $65 million increase in our 2019 DCF guidance.

Additionally, while the large majority of the capital associated with these newly sanctioned projects is expected to be incurred in 2020 and 2021, we do not expect to issue common equity to fund our capital program in those years and we'll continue to explore and utilize potential asset sales, strategic JVs and alternative financing opportunities to add funding flexibility.

Moving to our capitalization and liquidity as illustrated on Slide 8. At quarter end, we had a long-term debt to adjusted EBITDA ratio of 2.8x, which benefits from S&L overperformance over the last 12 months. Excluding the S&L overperformance, we remain focused on continuing to migrate leverage down within our targeted long-term debt to adjusted EBITDA range and achieving mid-BBB credit ratings over time. Based on our updated 2019 guidance, we expect to exit the year with full year common unit distribution coverage of more than 200%, more than $1 billion of cash flow in excess of distributions, and per-unit results that exceed our prior expectations.

Thanks, Al. So we had a solid quarter of financial, operating and commercial performance, and we're pleased to have made the significant progress on a number of initiatives that position us well for our future. We remain intently focused on executing our 2019 plan and advancing the projects and initiatives that we set forth throughout our call today. A summary of the 2019 goals and the key takeaways from today's call are shown on Slide 9 and 10.

With that, we'd be happy to take your questions. I'll turn the call over to Roy.

Just maybe to start off on the guidance that you've put out today. I understand that it's going up partially for the -- or is going up with the S&L beat and so forth. I was just wondering if you can sort of give us a little bit of detail on the transportation side. You have margins going up, but you've got volumes going down. Any particular reason that you would attribute to the volume change?

Thanks, Shneur. This is Jeremy Goebel. Question is a good one in reflection of the changing in the industry on the upstream side. I think our guidance reflects our expectations for the year. It includes pipeline utilization changes with regard to Gulf Coast pipes coming online and potential barrels coming off of basins. So I think that's -- it's just to reflect our current guidance, our view. We will continue to update that throughout the year as we talk to our customers, but it's a dynamic time in the industry, and it's within 1% of our original forecast, but we're just reflecting it of where we think that the market is headed.

I think there's just a lot of moving pieces with respect to our asset base where it's hard to identify and simplify it to that. I think in the context of a $25 million move in the entire thing, that's just a reflection of the entire asset base and how we think -- see things moving differentials across the basin and market input (inaudible) barrels.

No. That makes perfect sense. And I didn't want to beat up on a minutiae item, just -- I just wanted a clarification. And then one other last clarification question. There sort of seems to be more and more participants joining the Wink to Webster pipeline. Does this change your CapEx outlook at all as you think about next year? And do you have a sense of what Plains' final ownership is going to be of the project?

Sure. We will own 16% of the Wink to Webster project, which will be over 1 million barrels a day and fully contracted pipeline. We're excited about it. We took a reduction in our interest to make room for the additional partners. We've given guidance for 2019 and that reflects our lower interest in the project, but at this point, we haven't given 2020 guidance for capital, but we will later this year.

Just want to follow up a little bit there on the Permian. And given kind of a -- producer commentary has been changing a bit there. Some people kind of pulling in on growth or deferring. And you guys, in the past, have kind of presented your view as far as longer-dated Permian growth. I'm wondering, has anything changed materially from your prior expectations, specifically, Concho discussed changes in their approach. So that would be helpful for any color there.

Sure. We continue to monitor that and stay in front of our customers. We have moderated our forecast in the Permian. That's reflected in our guidance forecast for the rest of 2019. We had a reduction coming into the year to 400 horizontal rigs and have steady state for the second half of this year. We're roughly at 390 now. So marginally, it is a bit lower, but it's fairly consistent with our views. But on the margin, it is lower and we'll continue to monitor producers' views and how they look to operate within cash flow and specific to our customers on our pipeline, and we'll stay on top of that.

Yes. Jeremy, this is Willie. It's -- the question that you ask is a good one but very difficult to answer. And I think that the key on this is we want to wait till the rest of this year. We will continue to monitor, as Jeremy said, but I think we'll be able to give a little better color on 2020 and beyond over the next 3 months.

That's helpful. And then maybe just following up with regards to the opportunities that arose in Canada. Would you be able to provide a bit more color on what happened there, and I guess, the ability to kind of capture those margins again in the future?

No. Those are sort of onetime type of events. A lot of it centered around differentials that got wider around post apportionment and around some of the upgrader outages in the -- the plant turnarounds in the -- in Western Canada. So I certainly wouldn't characterize those as recurring type of events.

Now that we're kind of midway through the year and you have a better sense of the JV structure on Wink to Webster schedule on Capline and St. James. As you look at some of these long-lead projects, just talk a little bit about how CapEx is shaping up for 2020 and just the potential or prospects that we could see CapEx lower next year versus 2019?

Yes, this is Al. I think our view was that we wanted to wait and update our 2020 capital probably in November on that call. We would probably say it'll be roughly equivalent to the neighborhood we are this year. Clearly, there's some timing issues to whether some of it pushes into 2021 versus pulled forward in the 2020. There's also whether or not we look at doing a project finance inside of the Red Oak joint venture. So there are some things that could cause it to shift. But we think it will be roughly in the neighborhood of this year.

That's helpful. And then not to bring up a lightning rod item, but can you talk about just tariffs surcharges to the extent that future build-out pipelines, et cetera. This may be something that you employ when and where the procurement process incurs these costs.

Yes. This is Willie, Tristan. I'll give you my view on this. This is a -- as with everything, it seems these days there's a lot of moving parts. We -- on Cactus II, we ended up buying international, a non-U. S. steel because the U.S. steel producers were not able to produce the pipe in the spec that we wanted. The key point on this is we purchased the steel before the tariffs were implemented. And so we are going through the exception process with the Department of Commerce, and continue -- we'll continue to do that to try to get resolution on it. As a parallel path, we have moved forward with a surcharge. And if we're able to get an exemption, clearly, we would stop the surcharge and rebate it as appropriate but again, this is something that I highlighted early on where we've got to make sure that the regulations and the rules are clearer for people before they make the investments on these projects hopefully, that helps, Tristan.

So just to follow up on Wink to Webster. I think Delek had recently noted their net project costs and the implied total is about $2.4 billion. So I think that seemed a little bit low relative to the prior S-curve commentary just in terms of your expectations on 2020. So I wanted to see if that $2.4 billion was consistent with your expectations or if there were some Plains-specific considerations we should be aware of?

We're not going to rate exactly what Delek's quote was. They could have some financing or other things net to their interest. So I think that may not necessarily tie directly to ours. I think ours is closer to the $500 million or $550 million range net to our interest for the entire scope of the project and without financing.

Got it. That's helpful. And then just looking at the Rangeland and Western Corridor expansions. Can you provide a bit of context on the scope of that project and what the driver is of 2021 in-service? Would those barrels be expected to flow on Liberty and Red Oak? Or should we expect some of those to be dropped off in Billings or other refinery complexes?

That's a good question. Think of Rangeland as north of the border, currently flows into Edmonton, both the ability to flow the Edmonton or sundry barrels down to the border and have it picked up by the Western Corridor system. At Guernsey, it will connect to the Liberty project and ultimately into Red Oak to feed barrels to the integrated solution with P 66 Plains and the outperformers in the system.

Got it. And just a quick clarification. If you were to get the system online a little bit early with Western Corridor, would Saddlehorn be an interim solution? Or is it still pretty firm that you need Liberty online?

The Saddlehorn open season, as Willie suggested, recently closed, and that will largely be a full pipeline. So I think the intent is to bring a lot of that capacity on in a similar time frame. If there are earlier opportunities, we certainly look to take advantage of them.

There is some work that needs to be done on Western Corridor as well. So it's probably not a huge time line difference between when Western Corridor will be capable of increased capacity and when Liberty would be in service.

Al, can you speak to how high you'd be willing to let leverage go and your metrics go sort of on a temporary basis? If you've got a large number to finance in 2020, with the fact that you may have visibility to getting that leverage back down to the 3s as these projects come online? Just curious kind of how much headroom you think you might have on the metrics?

We do intend to migrate. When we look at it internally, I know it's hard from the outside, but we normalize what we think S&L will be on an ongoing basis. And so we do expect, with the addition of Red Oak, a slight uptick in 2020 from where we're at, and then migrating down. We will not do -- bring it up to a point where it would cause a concern, but we don't view that we have to be inside of the newly established leverage range in 2020. We will migrate down over time.

Keep trying. Then maybe just in terms of Capline. Can you just speak to, I guess, the volumes on that expansion? How much is contracted? Is that refiner-driven, producer-driven? Just kind of what actually emerged from the open season? Just curious if there's more color there?

I think, Gabe, at this point we'd say that it's sufficient to reverse the Capline pipeline system from Patoka South, also to expand and tie-in the Diamond system and support that. So we've met in excess of our internal returns as well as our partners to sanction the project. We'll be looking for opportunities to add additional volume and commitments to the system based on timing of other connecting carriers and volume. So we'll be on top of that with the ability to continue to increase returns.

One other point on that is that there's an additional benefit for us. With Capline idle, you've got cost to maintain that. When you put it in service, you'd certainly -- you'd save some money there as well. So that's one of the things that helps the return.

Yes. I'll -- this is Chris Chandler. I'll talk on the extension of Diamond. There is about a 40-mile segment that we'll be laying from Memphis to be able to tie in to Capline. And that will, of course, require normal permits for that new piece of pipe.

Okay. Second question is just on the quarter. In terms of S&L, I'm sure you're not going to give me exact numbers. But I mean can you give any kind of just like rough idea of the magnitude of how much of the beat or the contribution came from 2 crude oil locational spreads versus the Canadian NGL business?

The updated transportation guidance, the $1.7 billion, implies a pretty steep ramp in the second half of the year. Is that mainly Cactus II starting up? Or is there anything else significant that drives EBITDA higher in the balance of the year?

That's a significant contributor. It's one of the primary contributors in the second half of the year. But the rest of it is just line of sight volume growth onto the system that we feel pretty comfortable with.

Okay. And then just a follow-up on the NGL business in S&L and Canada. How would you say that business is positioned right now with the low NGL pricing that we're seeing, but steep contango in the forward curves over the next few months and into 2020?

Yes. it's hard to go into a lot of detail. On our positioning, obviously, the contango market helps. We have propane and butane storage capacity, which we would take advantage of in this type of market. We've done a lot of work over the last year, streamlining our business and taking some of the volatility out of the business, making more consistent returns. So while I think we're well positioned, we've certainly put ourselves in a position where we probably won't see the spikes and upside in, say, a high-demand environment in the winter, but we also have eliminated the risk of significant amount of downside if we get into a low-demand winter. So I think we're pretty well positioned.

There are some concerns that Corpus export capacity won't be ready in time for the pipelines going there in the second half, and that could stop those pipes from ramping as much as initially thought. Is there any market intel you can share around your view on that?

I think we have line of sight into our connecting carriers and our shippers demand, but not necessarily to everyone else. Clearly, you can follow permitting processes and the schedule of the other facilities coming online, the PAA Eagle Ford JV with Enterprise that's starting up next month. But that's additional capacity that's coming online. And then our connecting carriers have already -- our shippers on Cactus II have already contracted the capacity necessary for their full demand. So maybe timing of tanks and connections. But for the large part there's definitely a line of sight for Cactus II to ramp up to its full capacity.

Great. And sorry to get back to this, but can you share any more detail on if the decrease in volumes in 2019 guidance was more on long haul or on gathering? I guess the low change in EBITDA would suggest that it was mostly gathering.

Yes. I'd say it's primarily gathering. It's -- whether it's timing, producers capital budgets. But as you're aware, our numbers are gathering in the long haul, so they propagate. But with the timing of Cactus II, that's going to offset some of the long-haul piece. So I think it's really primarily a gathering -- a view of gathering.

A lot has been hit on S&L and it sort of feels like the old days where big beats come out of that sector. So congrats on that. I do just want to ask, it does seem like there was a tick up in the short-term debt at the end of the quarter. And I'm guessing that relates to the increase in activity there. Is that right? And then, should we expect to see that trend back down? Or how should we think about that?

This is Al. I'll take a shot at it. Yes, partially, we've been in a situation where we haven't had a need to borrow short term as much as what our inventory positions were. And that's been for a number of quarters. This quarter, we actually had -- and I think it's embedded in one of the footnotes on the slide. We exited with $400 million of cash on the balance sheet again. So technically, if we would have been able to pay everything down, it would have been a lot lower as well. That increase wouldn't have been as much. But for a number of quarters, following the BridgeTex sale, we haven't been able to (inaudible) from the use of -- from a use of cash. And this quarter, we had the cash on the balance sheet again.

Dennis, this is Willie. Let me see if I can give some color on this. S&L this year is playing its position exactly as we expected. We've given guidance over the last number of periods of time that once the pipes get overbuilt, the arbitrage opportunities will go away, right? So clearly, this year is something where the spreads have been wider. We've been able to capture opportunities there. And exactly what we've said we think will happen is happening in that. As the long haul pipes start -- are starting up later part of this year, the arbitrage opportunities go away. The twist on that was Canada. And I think some of that is getting solved today as well with both additional volumes leaving Canada because of the slight reductions of constraints as well as some of the rail facilities pulling barrels out. So I wouldn't -- please don't take this S&L performance as something that's different than what we talked about. We have always said meaningfully less S&L in 2020 going forward because of the pipes that have been built, and the way we ought to view our S&L segment is it provides the ability to capture arbs when they're there. And we'll use that to pay for capital investments or reduce debt, but we shouldn't count on the -- we shouldn't count on any large number as far as S&L goes going forward, at this point in time anyway.

Most of my questions have been hit, but I just wanted to go back to your projects on the Western Corridor and the Rangeland. I'm just curious the additional flexibility that you're adding, does it help you move the heavier volumes too? Or is it more of lighter volumes and then that helps offload some of the lighter volumes from some of other pipelines?

So it will -- it's designed as a light pipeline because of the size of the Western Corridor and Rangeland system so that it would be prohibitive to move any substantial volume of heavy. So it's going to be a light-only pipeline system that will tie into Cushing and then eventually distribute to multiple Gulf Coast destinations. So it offers a lot of flexibility to the shippers.

Okay, got it. And then on Capline reversal. I was wondering if you could talk a little bit now the -- about the return from that? Should we expect that to be better than some of the other project returns that you've outlined?

Wanted to revisit the guidance for transportation for 2019 and your degree of confidence in it. It seems like there's almost daily land mines right now in the E&P space. Is the guidance based on discussions you've had prior to Q2? Does it incorporate everything we've seen in Q2? And then does it risk it for other things that might happen across the year?

That's a good question. But I'd say that we're in active dialogue. We have an expansive lease marketing and pipeline commercial group that's in constant contact with our customers. We get, from the vast majority of our shippers, monthly updates. So I think we have a good sense for -- if you think about it, the planning cycle for the upstream guidance from when the rig shows up to when it's production, that's roughly 8 months is the cycle time now. The line -- the crystal ball gets fuzzy outside of 6, 7, 8 months, but within a 6-month window, you usually have a fairly higher degree, but there's going to be variability. And things are going to go higher in some areas and lower in other, but more of that's going to be driven by individual well performance, not changes in activity. 2020 will look different because of changes in activity, but the second half of this year will largely be driven by well performance of things that are already planned to come online. So that would put the 2020 as a different degree of uncertainty as the second half of this year.

Becca, all the things you mentioned go into our forecasting. We start with sort of dialogue we have with producers. We incorporate our views and we adjust it for potential risk with respect to timing, performance, et cetera. So listen, it's not going to be exact. It's our best estimate. But we try and factor in many of the things that you raised in your question.